Intel will not be building a $700m wafer-testing plant in India, a local newspaper has claimed.

According to Indian business-oriented daily, the Business Standard, Intel put the plans for the plant on hold after it failed to gain tax concessions from the Indian government.

The paper attributed the claim to an unnamed Intel official, who said:

“The company conveyed to the government last week that it would not be able to make the investment as the project would not be viable without the tax concessions. The company, however, said it would explore opportunities in the future."

Negotiations between Intel and the Indian government emerged in March, when Dayanidhi Maran, India's minister for information technology and communications, claimed Intel was close to a decision on siting the facility in India. The country has been on Intel's list of possible plant sites for some time, as former CEO Craig Barrett admitted in November 2004. The chip giant already has a number of software development and R&D facilities in the sub-continent.

In July, however, the Business Standard claimed the talks were faltering. Citing government sources, the paper claimed Intel had asked India to fork out $100m up front - a payment the nation appears unwilling to make. Intel is also negotiating for tax-beaks and other incentives, all of which are part and parcel of major plant plans.

This week's report suggest that the funding and incentives have not been forthcoming. The government is concerned that such a move might set up a precedent other foreign companies could exploit, the paper said. ®